Research on H

INDEX * Background Of The Entrepreneur * Reasons For Selecting The Entrepreneurial Career * Starting The Enterprise * The Type Of Enterprise * Process Of Setting This Enterprise, Products/Services * Investment Made * Growth Profile * Marketing Practices Followed * Profit Or Loss * Problems Faced * Environmental Concerns Undertaken * Social Responsibility * Future Expansion/ Projects Background of the Entrepreneur: Stefan Persson (born October 4, 1947) is the son of Erling Persson who founded the Swedish fashion company Hennes & Mauritz (H&M). Persson was born the same year, 1947, as H&M.

His father, Erling, was the son of a butcher in Vasteras, an hour or so outside of Stockholm. Stefan Persson chairs the hugely successful clothing retailer Hennes & Mauritz AB, a company founded by his father in Sweden in 1947. Known informally as "H&M," the international chain of nearly 900 stores has mastered the art of delivering cheap but chic styles and is poised to corner this segment of the United States market. Ranked Sweden's richest private citizen, Persson is widely credited with taking the company global when he succeeded his father as chief executive officer in 1982.

Since 1982 Stefan has been the main shareholder of H;M. According to Forbes Magazine, Persson has worth US$22. 4 billion in 2010, making him the second richest person in Sweden and the 13th richest person in the world. In 2009 his son Karl-Johan Persson took over as President and CEO of Hennes ; Mauritz. Stefan lives in Stockholm, Sweden. Reasons for Selecting the Entrepreneurial Career: As an entrepreneur, the senior Persson traveled to New York City just after World War II and was impressed by large department stores like Macy's and the range of women's apparel they offered.

Returning to Vasteras, he opened a women's clothing store, Hennes ("hers" in Swedish), which offered inexpensive but stylish apparel. It proved a hit with locals, and was soon able to open a Stockholm store, where lines around the block formed on its first day of business. "The idea of providing such garments for the average woman fitted in well with the egalitarian mood of post–war Sweden," noted Financial Times writer Nicholas George, who wrote that the Scandinavian country's thriving economy helped make it rise quickly to the list of the world's most affluent nations. It is often said that if Per–Albin Hansson, the legendary Social Democratic leader, created Sweden's 'people's home' with welfare and security, Ingvar Kamprad, founder of IKEA, furnished it and Erling Persson clothed it. " Persson's father, Erling, died at age 85 in October of 2002. He and his sister, Lottie, hold some 70 percent of H;M voting shares, and 37 percent of its capital. Starting the Enterprise: H;M was established in Vasteras, Sweden in 1947 by Erling Persson.

At the very beginning, when the first store was opened, it was actually given the name Hennes (the Swedish word for “hers”) because only women’s clothes were sold there at that time. The Hennes company became "H&M" in 1968 when it bought Mauritz Widforss, a Swedish hunting and gun retailer, which gave them a men's clothing line. By then, it had cautiously ventured abroad, opening stores in Norway and Denmark. Persson joined his father's company in 1972, and helped out at the launch of H;M's first London store four years later by standing outside and handing out ABBA records as a promotional stunt.

He became board chair in 1979, with his father remaining chief executive officer (CEO), and began to accelerate the expansion process soon afterward. The company moved into West Germany in 1980, and by 1985 had 200 stores across the continent and in the United Kingdom. In the following years, H&M kept expanding continuously. Especially after 1982, it expanded with a high speed. Stefan became Chairman of the Board in 1998. Today the majority of H&M's clothing is manufactured in Asia and Europe including  China,  Turkey,  India,  Bangladesh and Egypt.

The Type of Enterprise: At the very beginning, when the first store was opened, it was actually given the name Hennes (the Swedish word for “hers”) because only women’s clothes were sold there at that time. Later in 1968, Erling Persson bought Mauritz Widforss, a hunting and gun store in Stockholm. Just from then, the men’s clothes began to be sold in the stores. Included in the inventory was a supply of men's clothing, prompting Persson to expand into menswear. Accordingly, he renamed the store Hennes & Mauritz, later abbreviated to H&M.

During the first 30 years of its existence, the company had a low-end image, and price was the most important element of marketing-mix. The positioning has been changed in 1980’s, when Stefan Persson became Managing Director and focused on improving quality, bringing new designs, advertising and reducing operational costs. He also employed the new design director – Margareta van den Bosch. Process Of Setting This Enterprise, Products/Services: H&M expanded through organic growth, and it financed new market entries with own cash reserves. In 2007 the company managed more then 1,500 stores in 28 countries.

Its development is not only fast but also profitable – during the last five years sales including VAT has increased by 73% and profit after tax by 139%. H&M aims at increasing the number of stores by 10-15% a year, and to increase sales at the existing stores. Designing: Until the 1980’s the company mostly bought products from its agents in Asian countries and then re-sold them in its stores. In 1987, the company striving to improve its positioning employed new design director Margereta van den Bosch and started to build a designers team.

The new idea was to design and produce items that customers were demanding in the stores. Today, the headquarters in Sweden employ around 100 internal designers and cooperate with around 50 pattern designers and 100 buyers. Together, they create the company’s collections, considering the three basic factors: fashion, quality and price. The basis for each collection are customer demands. Although there are two main collections every year – the spring and the autumn one, H&M release many sub-collections in every season, so that each week customers can find something new in the H&M stores.

Every concept, like Women, Men, Kids, Divided and Denim has its own team of designers, buyers, pattern makers, assistants 29 and controllers. Their common goal is to produce garments according to consumer demands. Buying and production: H&M does not own any factories and relies on network of external suppliers Buyers, who are part of designer process are in contact with 22 production offices, located in all countries with significant amount of production. Personnel working there have been selected locally, and their main task is to mediate between buying department and external suppliers.

The initial reason for establishing production offices was that it helped avoiding miscommunications, because there were often differences between designers suggestions and final products. In 2007, about two-thirds of the suppliers were based in Asia; half of these in China and half in Bangladesh, Cambodia, India, Indonesia, South Korea, Pakistan and Sri Lanka. The remaining one-third of suppliers had production in Europe, mainly in Turkey. The remaining countries of manufacturing were Italy, Portugal, Greece, Bulgaria, Romania, Lithuania, Poland and England. Distribution:

H&M controls all the stages of the logistics, as it acts as an importer and wholesaler, and then as a retailer (with exception of the Middle East countries), and the process is managed centrally from Stockholm (ICFAI, 2008). There are about 3,200 people employed in the logistics department in H&M. For transport, H&M uses external contract companies, and goods produced in Asia are shipped mainly by sea in order to minimize costs. Almost all finished goods, from all suppliers around the world are shipped to the central warehouse – stock terminal in Hamburg, Germany and then are distributed to the destination countries.

However, in 2006 H&M started implementing the concept of regional grouping, which means that goods should not be distributed in each country individually, but in several groups of countries. Thus, the company was going to place some centralized functions like designing, buying, production and logistics with another buying company. Store management: When planning new stores or new market entries, H&M carry out extensive research, including consumers demographics, purchasing power, competition and local shopping areas (ICFAI, 208). In countries with important market potential the company acquires local chains.

Store locations are considered an important element of the expansion strategy. Stores should be located in prime locations i. e. in main shopping areas of major cities and towns. The headquarters analyses best locations for prospect stores and wait until they are available. All the stores are self-service stores, and can be divided into full range stores and concept stores, with area between 200 and 700 sq meter. Restocking takes place every day between 7. 00 and 9. 00 am, and in case of stores with particularly high demand it is dome up to three times a day.

There is also a general rule, that an item should not stay in a store longer than one month. H&M largely practices job rotation. Stores staff must carry out various duties such as cash desk, displaying and customer assistance, and they have possibilities of promotion, for positions like production coordinators, quality controllers, auditors, etc. On the other hand, people who work in offices are sent from time to time to stores in order to maintain contact with clients. Stores personnel are recruited locally, because they have knowledge about the local market and are considered important when deciding about the strategy.

All new employees must participate in a three week long introduction course and are assigned a mentor. In case of entering a new market or opening a new shop, both recruitment and training are carried out by experienced staff from other locations. It is considered important to transfer and implement knowledge, skills and H&M culture in new locations. * Investment Made: H&M's Board of Directors Stefan Persson Chairman of the Board and member of the Auditing Committee. Born 1947. Year elected :1979 Primary occupation :Chairman of the Board of H;M.

Other significant board assignments :Member of the Association of MSAB and board assignments in family-owned companies. Education :Stockholm University ; Lund University, 1969–1973. Work experience:1976–1982 Country Manager for H;M in the UK and responsible for H;M’s expansion abroad. 1982–1998 Managing Director and Chief Executive Officer of H;M. 1998– Chairman of the Board of H;M. Shareholding: 372,548,800 Mia Brunell Livfors Board member. Born 1965. Year elected:2008 Primary occupation: President and Chief Executive Officer at Investment AB Kinnevik.

Other significant board assignments: Member of the Board of Efva Attling Stockholm AB, Metro International S. A. , Tele2 AB, Transcom WorldWide S. A. , Korsnas AB and Mellersta Sveriges Lantbruks AB since 2006, as well as Millicom International Cellular S. A. and Modern Times Group MTG AB since 2007. Education:Studies in Business Administration, Stockholm University. Work experience: 1989-1992 Consensus AB. 1992-2006 Various managerial positions within Modern Times Group MTG AB 1992-2001 and Chief Financial Officer 2001-2006. 2006- Managing Director and Chief Executive Officer, Investment AB Kinnevik.

Shareholding: Shares held together with related parties 600 Anders Dahlvig Board member. Born 1957 Year elected: 2010 Primary Occupation: Board assignments Other significant board assignments:Chairman of the New Wave Group. Member of the Board of Kingfisher plc Education:Bachelor of Science degree in Business Administration, Lund University 1980 Masters of Arts degree in Economics, University of California Santa Barbara, 1982 Work experience:1983-1993 Various roles within IKEA in Sweden, Germany, Switzerland and Belgium. 1993-1997 Managing Director of IKEA UK 1997-1999 Vice President of IKEA Europe 999-2009 CEO and President of the IKEA Group Shareholding:9,000 Lottie Knutson Board member. Born 1964. Year elected 2006 Primary occupation Marketing Director at Fritidsresor Group Nordic, with responsibility for marketing, communications as well as corporate and social responsibility. Other significant board assignments None except member of the Board of H;M. Education Universite de Paris III, Diplome de Culture Francaise, 1985-1986. Theatre history, Stockholm University, 1989, The Department of Journalism at Stockholm University, 1987-1989. Work experience 1988-1989 Journalist, Svenska Dagbladet 989-1995 The communications department at SAS Group 1995-1996 PR consultant, Johansson ; Co 1996-1998 PR- and communications responsible consultant, Bates Sweden  1998-1999 Communications consultant, JKL 1999- Marketing Director at Fritidsresor Group for the Nordic countries  Shareholding 1,200 Shares held by related parties 0 Independent of the company and the company management as defined by the Swedish Code of Corporate Governance Yes Independent of major shareholders in the company as defined by the Swedish Code of Corporate Governance Yes Sussi Kvart Board member and member of the Auditing Committee.

Born 1956. Year elected 1998 Primary occupation Consulting, with a focus on strategic business advice, corporate governance and board procedures. Other significant board assignments Chairman of Kvinvest AB, member of the boards of Healthcare Provision – Stockholm County Council, Stockholms Stadshus AB, Transparency International Sweden and DGC One AB. Education Bachelor of Laws, Lund University 1980. Work experience 1983–1989 Lagerlof (now Linklaters) law firm, as lawyer from 1986. 1989–1991 Political expert, riksdagen (Swedish parliament), parliamentary office of the Swedish Liberal Party. 991–1993 Political expert, Swedish Cabinet Office. 1993–1999 Company solicitor, LM Ericsson. 1997–2001 Member of the Aktiebolagskommitten (Swedish Companies Act Committee). 2000–2001 Working as a solicitor and with business development at LM Ericsson, Corporate Marketing and Strategic Business Development. 2002– Sussi Kvart AB. Shareholding 4,400 Shares held by related parties 1,700 Independent of the company and the company management as defined by the Swedish Code of Corporate Governance Yes Independent of major shareholders in the company as defined by the Swedish Code of Corporate Governance Yes

Bo Lundquist Board member and Chairman of the Auditing Committee. Born 1942. Year elected 1995 Primary occupation Head of family-owned investment company. Board assignments. Other significant board assignments Chairman of the boards of Stockholm University College of Physical Education and Sports (GIH), Teknikmagasinet AB (unlisted company) and member of the board of Frans Svanstrom AB (unlisted company). Member of the board of the Anders Wall Foundation for Free Enterprise. Education M. Sc. Engineering, Chalmers University of Technology in Gothenburg 1968. Work experience 970–1974 Administration Manager, Lulea Colleage 1975–1978 Head of Division, SSAB 1978–1982 Sales Manager, Sandvik 1982–1984 CEO, Bulten Senior positions in the public sector and in Swedish listed companies, including: 1984–1990 Vice President of Trelleborg. 1991–1998 Managing Director and Chief Executive Officer, at Esselte. 1994–1998 Involved in various important trade ; industry organisations, including Chairman of the Federation of Swedish Commerce and Trade. Shareholding 0 Shares held by related parties 40,000 * * Shares owned through Bo Lundquist's company Caboran AB

Independent of the company and the company management as defined by the Swedish Code of Corporate Governance Yes Independent of major shareholders in the company as defined by the Swedish Code of Corporate Governance Yes Melker Schorling Board member. Born 1947. Year elected 1998 Primary occupation Founder and owner of MSAB Other significant board assignments Chairman of MSAB,AarhusKarlshamn AB, Hexagon AB, Hexpol AB and Securitas AB. Education M. Sc. Business and Economics from the School of Business, Economics and Law, Gothenburg University 1970. Work experience 1970–1975 Controller, LM Ericsson, Mexico. 975–1979 Controller, ABB Flakt, Stockholm. 1979–1983 Managing Director, Essef Service, Stockholm. 1984–1987 Managing Director, Crawford Door, Lund. 1987–1992 Managing Director and Chief Executive Officer, Securitas AB, Stockholm. 1993–1997 Managing Director and Chief Executive Officer, Skanska AB, Stockholm. Shareholding 0 Shares held by related parties 228,000 * * Shares owned through Melker Schorling AB Independent of the company and the company management as defined by the Swedish Code of Corporate Governance Yes Independent of major shareholders in the company as defined by the Swedish Code of Corporate Governance No

Christian Sievert Board member. Born 1969 Year elected 2010 Primary Occupation CEO of Segulah Other significant board assignments Member of the boards of AB Segulah, Segulah Advisor AB, Gunnebo Industrier and deputy member of Infocare Education MSc in Business Administration, School of Economics, Stockholm 1994 Work experience 1994-1997 Bain & Company, consultant, Stockholm and San Francisco, USA 1997-2003 Investment Manager and Partner, Segulah, 2003-CEO/Managing Partner of Segulah Shareholding 22,600 Shares held by related parties 600

Independent of the company and the company management as defined by the Swedish Code of Corporate Governance Yes Independent of major shareholders in the company as defined by the Swedish Code of Corporate Governance Yes Marianne Broman Deputy employee representative. Born 1944 Year elected 1995 Shareholding 140 Shares held by related parties 290 Independent of the company and the company management as defined by the Swedish Code of Corporate Governance No  Independent of major shareholders in the company as defined by the Swedish Code of Corporate Governance No Margareta Welinder Employee representative. born 1962

Year elected 2007 Shareholding 0 Shares held by related parties 0 Independent of the company and the company management as defined by the Swedish Code of Corporate Governance No  Independent of major shareholders in the company as defined by the Swedish Code of Corporate Governance No Tina Jaderberg 1Employee representative. Born 1974 Year elected 2007 Shareholding 0 Shares held by related parties 0 Independent of the company and the company management as defined by the Swedish Code of Corporate Governance No  Independent of major shareholders in the company as defined by the Swedish Code of Corporate Governance No

Agneta Ramberg Deputy employee representative. Born 1946 Year elected 1997 Shareholding 0 Shares held by related parties 0 Independent of the company and the company management as defined by the Swedish Code of Corporate Governance No  Independent of major shareholders in the company as defined by the Swedish Code of Corporate Governance No  * * Growth Profile: The first store, “Hennes”, at that time offering only clothes for women, immediately attracted customers, and in next decades the company successfully expanded first in the domestic market and then internationally.

The milestones in the company’s development have been presented in the table below: Year| Milestones| 1947| opening the first shop "Hennes" in Vasteras, Sweden| 1964| opening the first shop in Norway| 1967| opening the first shop in Denmark| 1968| acquisition of MauritzWidforss, new brand Hennes and Mauritz, men clothes are added| 1972| Stefan Persson (son) joins the business| 1974| the company goes public (Stockholm stock exchange)| 1975| cosmetics are added| 1976| entry the first non-Scandinavian market - Great Britain| 1977| clothes for teenagers are added| 978| clothes for babies are added| 1980| acquisition of Rowell's mail order company, introduction of sales through catalogue| 1987| Margareta van den Bosch joins the company as design director| 1998| The company starts online sales in Sweden| 1999| the company starts online sales in Denmark and Finland| 2001| the company starts online sales in Norway| Today H;M operates in 37 countries and has 76,000 employees all working to the same philosophy: to bring its customers fashion and quality at the best price. Today H;M operates 2,000 stores spead over 37 markets.

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